The euro has started the new week on the front foot against the US dollar, with the EURUSD exchanging at 1.07881 at 7.20 GMT, having gained +0.13 on the day’s opening. The pair has built upside momentum after rising during the last three consecutive sessions. The pair seems to be on course to continue heading up on Monday. However, that will depend largely not only on its ability to hold on to its gains but also on breaking the psychological barrier at 1.0800.
US markets have closed for Washington’s Birthday holiday, meaning there won’t be any economic data coming out of the United States on Monday. Similarly, the Eurozone won’t be publishing any impactful data. Therefore, buyers and sellers will be keen on the geopolitical developments, ahead of Wednesday’s release of FOMC minutes and a speech by FOMC member Michelle Bowman.
The US dollar has lost most of the gains made against the DXY currencies over the last week. The DXY, index stood at 104.186 at the time of writing, down -0.64% from 104.859, six days ago. However, the US dollar may get some tailwind from rising US treasury yields. At the time of writing, yields on the 10-year bonds were at 4.281%, up 4 basis points, while 5-year bonds were up by 5 basis points, with an interest rate of 4.276%.
Traders will likely ride the current upside momentum, while keeping an eye on possible geopolitical developments in the Middle East. Statements attributed to an Israeli war cabinet member has revealed that a ground offensive into Rafah is likely to come in early March if Hamas refuses to release all the hostages. This will likely calm nerves in the intervening period, as ceasefire negotiations continue.
EURUSD has built momentum that will likely sustain further gains, as indicated by the RSI. The pair will look to pivot at 1.0760, from which the bulls will push upward to encounter the first resistance at 1.0795. However, beyond that point, the next barrier will be the psychological resistance at 1.0800, beyond which they could test 1.0810. Nonetheless, EURUSD could lose the upside momentum if the sellers dominate the market below 1.0760. At that point, the first support could be at 1.0745, and a breach could see the support fall further to 1.0730.
This post was last modified on Feb 19, 2024, 15:37 GMT 15:37